Weekend Investing Daily Byte - 3 Jan 2024

How are the Markets Looking ?

In the current market scenario, we are witnessing a small intermediate downtrend. After the rally in November, profit-taking has started occurring, especially since the new year began where we were expecting more flows to come in. Despite this, the rally in December has preempted any significant sell-off, which means that even if there is a minor correction, it is not a cause for concern.

A potential point for the Nifty to rebound could be in the region of around 21,000 or 20,800. However, it is essential to mention that market conditions are dynamic, and we cannot predict with certainty if the market will keep going up or experience further corrections.

Over the past three days, the market has shown some softness, and trading volumes have been reasonably all right. However, several factors contribute to this downtrend, including leading banks and stock movements.

Nifty Heatmap

Today, HDFC Bank and other banks are leading the downward move, while stocks like Coal India, Reliance, and Nestle have also seen a decline. The steel sector has been affected by the falling Chinese market, and auto stocks, except Bajaj Auto announcing their buybacl, have been reeling down.

In recent news, Adani stocks experienced an upswing after the Supreme Court found no regularities in the FDI investments. However, Sebi will continue its investigation for the next three months. ITC has seen a rise of 1.5%, but overall, the market seems weak, and investors are finding limited places to hide.

Let’s take a look at the market trends over the last year. In the banking sector, not much movement has happened with HDFC Bank (+3%), State Bank of India (+4%), and Kotak Bank (+2%) showing minimal gains. IT stocks have experienced mixed performance, with Infosys remaining stagnant and TCS (+13%), HCL Tech (+38%), and Wipro (+16%) showing varying levels of growth. The auto industry has performed well, with Tata Motors and Bajaj Auto up by 97% and 96% respectively. Mahindra, Maruti, and Hero Motor have also seen positive growth. 2 wheelers and some 4 wheelers have done very well.

In the consumption sector, Titan has shown impressive growth of 43%. Cement and commodity stocks like Ultra Semco (+43%), Hindalco (+22%), and Grasim (+20%) have also performed well. Steel stocks, such as JSW and Tata Steel, have experienced mild growth. Some notable performers include Coal India (+71%), ONGC (+40%), and BPCL (+38%). On the other hand, FMCG stocks like Unilevers, Nestle, and Britannia have shown limited movement. The pharmaceutical sector, including Sun Pharma, Dr. Reddy’s, and Cipla, has been performing well, with significant gains in the last twelve months. Adani Enterprise is down last 12 months, along with Asian paints is mildly up.

Overall, around 20-25 stocks in the Nifty have performed exceptionally well, some showing double-digit growth. However, a handful of stocks have experienced negative or single-digit growth. It is crucial to focus on the strongest performers and invest accordingly.

The Weekend Investing strategy has successfully identified and recommended stocks within the top ten performers in the Indian market.

Sectoral Overview

Nifty real estate performed the best, showing a growth of 1.23%. PSU banks also did well, with a growth of 1.1%. Pharma and healthcare sectors saw moderate gains, while Nifty metal and Nifty IT experienced declines of -1.8% and -2.5% respectively.

Looking at global markets, Nasdaq fell by 1.6% yesterday, and it is currently not surpassing its previous high. This has resulted in fear and weakness in IT stocks.

Mid & Small Cap Performance

Mid-cap stocks also experienced some initial decline but ended on a positive note. Both mid-cap and small-cap indexes are exhibiting strength and showing no signs of weakness.

Bank Nifty Overview

Nifty Bank showed a slight dip, but it made a nice recovery towards the end.

Highlights – Nifty IT

The Nifty IT sector is at a crucial point, and a breakdown here could lead to further downward movement and consolidation. The future course of action largely depends on the Nasdaq’s performance.